DEF 14A: Allbirds Seeks Stockholder Approval for Reverse Stock Split to Regain Nasdaq Compliance

Allbirds, Inc. is asking its stockholders to approve a reverse stock split at a ratio between 1:10 and 1:50 to increase its stock price and regain compliance with Nasdaq's minimum listing requirements.

Summary

• Allbirds, Inc. is holding a special meeting of stockholders on August 13, 2024, to vote on a proposal to amend the company's certificate of incorporation to effect a reverse stock split.
• The proposed reverse stock split would combine outstanding shares of Class A and Class B common stock at a ratio ranging from 1:10 to 1:50, with the exact ratio to be determined by the Board of Directors.
• The primary goal of the reverse stock split is to increase the per share market price of Allbirds' Class A Common Stock to meet the minimum closing bid price criteria for continued listing on the Nasdaq Global Select Market.
• The company received a notice from Nasdaq on April 2, 2024, indicating non-compliance with the minimum price criteria, which requires an average closing share price of at least $1.00 over a consecutive 30-trading-day period.
• Stockholders are also being asked to approve a proposal to adjourn the special meeting, if necessary, to solicit additional proxies if there are insufficient votes to approve the reverse stock split proposal.
• The record date for determining stockholders eligible to vote at the special meeting is June 20, 2024.
• As of the record date, there were 106,606,185 shares of Class A Common Stock and 50,847,305 shares of Class B Common Stock outstanding.
• Each share of Class A Common Stock is entitled to one vote, and each share of Class B Common Stock is entitled to ten votes.
• The Board of Directors recommends voting FOR both the reverse stock split proposal and the adjournment proposal.

Sentiment

Score: 6

Explanation: The document is primarily informational, outlining the details of the proposed reverse stock split. While the goal is positive (regaining Nasdaq compliance), the potential risks and uncertainties associated with the reverse stock split temper the overall sentiment.

Positives

• The reverse stock split aims to regain compliance with Nasdaq's minimum price criteria, which could maintain overall credibility to an investment in Allbirds' stock.
• Continued listing on Nasdaq could maintain visibility of Allbirds' stock among a larger pool of potential investors and could result in higher trading volumes.
• A higher stock price could encourage investor interest and improve the marketability of Allbirds' Class A Common Stock to a broader range of investors.
• A higher stock price could allow a broader range of institutions to invest in Allbirds' Class A Common Stock and could help attract, retain and motivate employees.
• The Board of Directors believes that stockholder approval of a range of ratios provides Allbirds with the most flexibility to achieve the desired results of the Reverse Stock Split.

Negatives

• The reverse stock split may not increase Allbirds' stock price.
• The market price of Allbirds' Class A Common Stock may not be maintained for any period of time after the reverse stock split.
• The reverse stock split may be viewed negatively by the market and, consequently, could lead to a decrease in Allbirds' overall market capitalization.
• The reverse stock split may decrease the liquidity of Allbirds' Class A Common Stock.
• The reverse stock split may result in higher transaction costs for transactions in Allbirds' Class A Common Stock.

Risks

• The reverse stock split may not achieve the desired results of increasing the stock price or maintaining Nasdaq compliance.
• The market price of Allbirds' Class A Common Stock will also be based on the company's performance and other factors, some of which are unrelated to the reverse stock split.
• If the market price of Allbirds' Class A Common Stock declines after the reverse stock split, the percentage decline as an absolute number and as a percentage of the company's overall market capitalization may be greater than would occur in the absence of a reverse stock split.
• The total market capitalization of Allbirds' Class A Common Stock after implementation of the reverse stock split may be lower than the total market capitalization before the reverse stock split.
• The reverse stock split may lead to reduced trading and a smaller number of market makers for Allbirds' Class A Common Stock.

Future Outlook

The Board of Directors will determine whether and when to effect the reverse stock split based on various factors, including the company's ability to maintain compliance with Nasdaq's minimum price criteria, historical trading price and volume, and prevailing market conditions.

Management Comments

• On behalf of the Board of Directors of Allbirds, we thank you for your continued support and look forward to seeing you at the Special Meeting.

Industry Context

Reverse stock splits are a relatively common strategy for companies facing delisting from major exchanges due to low stock prices. Other companies in similar situations may consider or have implemented similar measures to maintain their listing and improve investor perception.

Comparison to Industry Standards

• Many companies facing similar challenges with maintaining minimum listing requirements on exchanges like Nasdaq or the NYSE have employed reverse stock splits.
• For example, companies in the biotechnology, energy, and retail sectors have used reverse stock splits to increase their stock price and avoid delisting.
• The success of a reverse stock split often depends on the underlying health and growth prospects of the company, as a higher stock price alone may not sustain investor interest if the company's fundamentals do not improve.
• Comparable companies that have undertaken reverse stock splits include [hypothetical example] XYZ Corp, which implemented a 1-for-10 reverse split to regain compliance with Nasdaq listing rules, and ABC Inc, which used a 1-for-5 split for similar reasons.

Stakeholder Impact

• Shareholders will be impacted by the reverse stock split, potentially seeing a change in the number of shares they own and the market value of their holdings.
• Employees holding stock options or restricted stock units will see adjustments to their awards to reflect the reverse stock split.
• The company's ability to maintain its Nasdaq listing could impact its access to capital and its overall credibility with investors.

Next Steps

• Stockholders will vote on the reverse stock split proposal and the adjournment proposal at the Special Meeting on August 13, 2024.
• The Board of Directors will determine the exact ratio of the reverse stock split, if approved, and file a Certificate of Amendment with the Secretary of State of the State of Delaware.
• The company will notify stockholders of record and beneficial owners about the reverse stock split and provide instructions for processing the split.
• The Compensation Committee of the Board of Directors will make equitable adjustments to the company's equity plans and outstanding awards to reflect the reverse stock split.

Key Dates

Keywords

reverse stock split, stockholders, Nasdaq, Class A Common Stock, Class B Common Stock, proxy statement, minimum price criteria, Board of Directors, certificate of incorporation, special meeting